Groupon Business Model : Groupon Essays
• Groupon is more or less an aggregator platform for a two sided market and it cannot sustain unless both of the parties are benefited.
• In the long run the fact that even after high discounts, half of a merchant’s profit and non-returning customers, decline in quality of services might hamper its growth as merchants might get reluctant to partner up with them in long run.
• This, may destabilize the 2 sided market and may lead to a collapse. However, their new efforts like Groupon now & Groupon Rewards aim at improving this and might help the current situation.
Groupon’s Growth & Consumers: Groupon was using a very simple and universal business model which universally appealed to the merchants who were reluctant to spend money on advertising, which leads to its high scalability and explosive growth in its formative years all across the globe. This helped them raise over a $billion in fundraising and generate over $1.5 billion in revenue in over 500 cities.
• This growth attracted the consumers at the same time as Groupon suddenly provided them an easy access to deals and try new things. These customers when introduced to a new merchants sometimes convert to regular customers too.
• However, most of the consumers were attracted due to convenience, referrals and the…